Biden’s AI Export Rule Axed—Here’s What Comes Next

Commerce Department pivots to diplomacy over restrictions

The U.S. Department of Commerce abruptly scrapped the Biden administration’s Artificial Intelligence Diffusion Rule just months before its May 15, 2025, implementation date. The move signals a sharp policy shift—from blanket export controls to a deal-by-deal approach with allied nations.

“The Trump administration believes in an inclusive AI strategy with trusted partners, not unilateral restrictions,” Commerce Secretary Jeffrey Kessler told reporters.

Introduced in January 2025, the now-defunct rule sought to throttle AI chip exports by categorizing countries into three tiers. Tier 1 nations like Japan and South Korea faced no restrictions, while Tier 2 countries such as Mexico and Portugal encountered new limits. Tier 3—including China and Russia—saw existing controls tighten further. Critics argued the framework was overly rigid, risking collateral damage to global tech collaboration.

Huawei’s chips and the China factor

Alongside the reversal, the DOC issued fresh guidance targeting Huawei’s Ascend AI chips, warning companies worldwide of security risks. The document also highlighted concerns about U.S.-designed chips being used to train AI models in China and outlined tactics to prevent supply chain diversion. “We’re not dismantling safeguards—we’re refining them,” a senior official noted anonymously.

“The old rule treated Portugal like a backdoor to Beijing. That’s not how supply chains work,” argued a semiconductor lobbyist.

The Commerce Department instructed staff to halt enforcement immediately, with a replacement policy expected within 90 days. Insider reports suggest the new framework will prioritize direct negotiations with allies, echoing the Trump administration’s 2020 chip agreements with Taiwan and South Korea. Meanwhile, Beijing’s AI ambitions—fueled by smuggled Nvidia GPUs and homegrown alternatives—remain a top concern.

As the DOC rewrites the playbook, one thing is clear: the era of one-size-fits-all AI export rules is over. What emerges next will test whether diplomacy can outmaneuver decoupling.